Hubbard Industries is an all-equity firm whose shares have an expected return of 10.9%. Hubbard does a
Question:
Hubbard Industries is an all-equity firm whose shares have an expected return of 10.9%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debtequity ratio is 0.66. Due to the increased risk, shareholders now expect a return of 17.1%. Assuming there are no taxes and Hubbard’s debt is risk-free, what is the interest rate on the debt?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (QA)
Answered By
Aysha Ali
my name is ayesha ali. i have done my matriculation in science topics with a+ . then i got admission in the field of computer science and technology in punjab college, lahore. i have passed my final examination of college with a+ also. after that, i got admission in the biggest university of pakistan which is university of the punjab. i am studying business and information technology in my university. i always stand first in my class. i am very brilliant client. my experts always appreciate my work. my projects are very popular in my university because i always complete my work with extreme devotion. i have a great knowledge about all major science topics. science topics always remain my favorite topics. i am also a home expert. i teach many clients at my home ranging from pre-school level to university level. my clients always show excellent result. i am expert in writing essays, reports, speeches, researches and all type of projects. i also have a vast knowledge about business, marketing, cost accounting and finance. i am also expert in making presentations on powerpoint and microsoft word. if you need any sort of help in any topic, please dont hesitate to consult with me. i will provide you the best work at a very reasonable price. i am quality oriented and i have 5 year experience in the following field.
matriculation in science topics; inter in computer science; bachelors in business and information technology
_embed src=http://www.clocklink.com/clocks/0018-orange.swf?timezone=usa_albany& width=200 height=200 wmode=transparent type=application/x-shockwave-flash_
4.40+
11+ Reviews
14+ Question Solved
Related Book For
Corporate Finance The Core
ISBN: 9781292158334
4th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
Question Posted:
Students also viewed these Business questions
-
Hubbard Industries is an all-equity firm whose shares have an expected return of 11.1%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock until its debt-equity ratio is...
-
Hubbard Industries is a fully-capital company whose shares have an expected return of 10.8%. Hubbard performs a leveraged recapitalization, issuing debt and buying back shares, until its...
-
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
-
Because of excessive pollution on the Momiss River, the state of Momiss is going to build pollution control stations. Three sites (1, 2, and 3) are under consideration. Momiss is interested in...
-
Use market for loanable funds approach that we developed in class to explain what happens to national saving, private saving, private investment spending, and the rate of interest if the following...
-
When the journal editors receive research _______________ they send it out to other scientist for ______________ to make sure the research was properly _______________ and reported and to ensure that...
-
Refer to Googles financial statements in Appendix A to compute its equity ratio as of December 31, 2015, and December 31, 2014. Data From Google Financial Statement Appendix A Google Inc....
-
After watching the video on expatriates, discuss the following: 1. What kind of staffing approach is being used by Dubai? Explain. 2. What does Kevin ONeal, as an expatriate, bring to Dubai? 3. What...
-
There are 15 exceptions to carrier liability under the Carriage of Goods by Sea Act other than "perils of the sea". Which ones are similar to an event of force majeure that are usually placed in a...
-
Hartford Mining has 90 million shares that are currently trading for $2 per share and $160 million worth of debt. The debt is risk free and has an interest rate of 4%, and the expected return of...
-
Global Pistons (GP) has common stock with a market value of $470 million and debt with a value of $299 million. Investors expect a 13% return on the stock and a 5% return on the debt. Assume perfect...
-
Determine the moment about the origin O of the force F = (5 N)i (2 N)j + (3 N)k which acts at a point A. Assume that the position vector of A is (a) r = (4 m)i (2 m)j (1 m)k, (b) r = (8 m)i + (3...
-
Seat of Knowledge projected an employment level of 150 employees this year. With an unemployment tax of 3.2%, what was the company's expected unemployment tax bill assuming taxes are paid on the...
-
Calculate total shareholder return using the following information: dividend payout ratio=35%, dividends declared during the year=70,000, market price per share beginning of year=20, market price per...
-
Three types of entities required to produce annual financial reports that comply with the Australian Accounting Standards under the Corporations Act 2001 (Cth).Australia. Is administered by the...
-
An executor may account for newborn children if not included as beneficiaries. be a beneficiary of the will. determine the value for the assets. adjust the preferential share
-
For greater accuracy when using activity-based costing, management accountants should: Carefully estimate the total amount of overhead costs Have a larger number of cost pools . Compute a plant-wide...
-
How strong a base would you expect a Grignard reagent to be? Look at Table 8.1, and then predict whether the following reactions will occur as written.?(The p K a of NH 3 is 35.) (a) CH 3 MgBr + H ?...
-
Why is inventory management important for merchandising and manufacturing firms and what are the main tradeoffs for firms in managing their inventory?
-
Avicorp has a $10 million debt issue outstanding, with a 6% coupon rate. The debt has semiannual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently...
-
Book Co. has 1 million shares of common equity with a par (book) value of $1, retained earnings of $30 million, and its shares have a market value of $50 per share. It also has debt with a par value...
-
Consider a simple firm that has the following market-value balance sheet: Next year, there are two possible values for its assets, each equally likely: $1200 and $960. Its debt will be due with 5%...
-
Lee and Julia are common-law partners, both aged 35. Lee's mother, aged 75, lives with them and is financially dependant on Lee. While applying for life insurance, Lee mentions that if he dies, he...
-
Uality Inc. acquires Rekless Company for $100 million in cash at the beginning of its accounting year, and records the acquisition as a merger. At the date of acquisition, Rekless' reported net...
-
What additional data would you want to gather to help explain why sales transactions decrease on the days with the lowest sales? AQ2. How would you collect those additional data?
Study smarter with the SolutionInn App